Rising gas prices hit businesses big and small
Monday, March 14, 2011
Six months ago, Jeb Lopez launched a business ferrying automobile parts from suppliers to dealerships and body shops. Now, the price of gas is forcing him to dip into an emergency fund.
Lopez is among other local business owners who say the rapidly rising price of gas is taking a bite out of their profits and posing a strategic challenge. The price has jumped dramatically, from a national average for a gallon of regular gas of $3.12 one month ago to $3.54 as of Friday, according to AAA.
The average price of regular gas hit $3.52 in Maryland and $3.46 in Virginia last week.
"It affects everybody, from cab drivers . . . to pizza delivery guys," said John Townsend, a spokesman at AAA Mid-Atlantic. "They're all impacted by this."
Lopez's Alexandria-based business Wheelz Up uses six large cargo vans to deliver parts around the region, as far north as Baltimore and as far south as Richmond. Fully loaded, the vehicles can carry up to 9,000 pounds, and each averages about 750 miles per week, he said.
Some companies - including airlines - have been passing on higher fuel costs to customers in the form of surcharges, but small-business owners said it is undesirable and sometimes impossible to add those fees.
Lopez has applied a surcharge, but he said the company's gas expenses have been about triple the surcharge revenue.
Silver Spring-based office furniture company Innovative Business Interiors is paying more to receive the furniture it orders and paying more to get that furniture to customers, said President Charles Atwell.
"We're kind of in a quandary," he said. "We're trying to remain competitive, so we're still kind of seeing how it's going to play out."
So it goes, too, for Washingtonian Coach, which operates vehicles such as vans and limousines. The Silver Spring business can add some extra charges, but President Steele Hardy, said it simply has to absorb some of the additional cost.
Lopez's drivers are using iPhone apps to try to find the cheapest gas in the area and waiting until they reach the more distant suburbs, which often have lower prices, to fill up the vans' tanks. In some cases, Lopez has tried to group routes to save miles, but he said the urgency associated with delivering many parts limits his ability to do that.
He's started to use an emergency fund he estimates will last eight months.
"I want to wait it out," Lopez said. "I can ride the storm."